A horror start to the year in global financial markets wiped 2.5 per off the average Australian's superannuation balance in the first six trading days of 2016, as market pundits warn the recent turmoil could be the start of a 2008-style downturn.
The average super account lost 2.5 per cent in the first six trading days of 2016 to January 11, according to Chant West research provided exclusively to Fairfax Media. This figure is based on "balanced growth" funds, which are those with between 61 per cent and 80 per cent of capital invested in growth assets such as shares. This is the option the majority of working age Australians have their super in.
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Meaning the typical worker in their thirties who goes online to check their balance this week, expecting to see about $100,000, is likely to be perturbed to see roughly $2500 less.
Super fund members who elected to take more risk and put their super in a "high growth" option, with more than 81 per cent of capital invested in shares and other growth assets, are down on average 3 per cent year-to-date.
Super fund members in a "conservative" option, with between 21 per cent to 40 per cent of their capital in growth assets, have been cushioned dipping on average just 1 per cent in the shaky start to this year.
It comes after turmoil in China sparked a savage sell-off in global markets that has seen the local sharemarket post its worst start to the year on record down 7 per cent since for 2016 already.
Last week billionaire US investor George Soros said the current volatility in global markets sparked by turmoil in China "had echoes" of the global financial crisis of 2008 and that "investors should be very cautious".
The Royal Bank of Scotland's credit chief Andrew Roberts told clients to "sell everything" except high quality bonds this week as he predicted that recent events in China have "set off a major correction and it is going to snowball".
No one knows the 'right time'
Chant West head of research Ian Fryer said super fund members should think carefully before rushing to try to "time the market" to switch their super into a more conservative strategy.
"The problem is that no one really knows the right time until months later and then it's too late."
It is also important to remember that super is a long-term investment and consider January's falls in the context of four consecutive calendar years of positive returns, Mr Fryer said.
Final fund performance figures for 2015 are still being compiled but Chant West analysts estimated that average returns for the year would come in at 4.5 per cent across balanced growth options, 5 per cent for high growth options, and 3.5 per cent for conservative options.
"People in a balanced growth option with one of the top-performing funds can expect to see an annual return of about 7.5 per cent for 2015 when they get their next statement," Mr Fryer said.
Local superannuation managers are warning their clients not to panic.
"There will always be market fluctuations that affect short-term investment performance, but long-term returns are what's most important," AustralianSuper chief investment officer Mark Delaney said.
QSuper chief officer advice Glen Hipwood said people worried about how the current market volatility might affect their retirement plans should seek advice rather than "panic or react without being well informed."
There are a number of factors to consider when thinking about changing the investment option for your super, notably your investment time horizon, based on age and plans for retirement, and what part super plays within your portfolio of other assets, he said.
"If people are worried about a drop in their balance they should get some advice before changing anything," AMP Financial Planning managing director Michael Guggenheimer said.